Programmatic Buying: What’s All the Buzz About? – Pt. 1

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There seems to be a lot of buzz about programmatic buying and how it’s going to change the world of media buying. Every media genre is trying to deliver the right ad copy, to the right audience, at the right time, for the best rate. For every article written, there are probably 20 different takes on what programmatic buying actually is. One thing’s for sure: an increasing number of brands are taking advantage of the benefits of automation in digital marketing.

What is Programmatic Buying?

There’s one common thread everyone seems to agree upon: advertisers are using technology platforms in order to get the best real-time bid (RTB) media buys. They are also leveraging massive amounts of proprietary data across multiple tracking sources to improve ad targeting and increase efficiency. Simply put, programmatic buying is any ad buy that’s processed from one machine to another machine. It is a technology that automates the ad buying and placement, powering more targeted ad buys with the ability to respond in real time, through the use of software and algorithms.

Who Uses Programmatic Buying – and Why?

Magna Global forecasts that spend on programmatic advertising this year will increase 52% to $21 billion globally. From the digital side, programmatic buying is nothing new. Google has been a leader in technology-based, real-time bids. Advertisers have been using programmatic buying through targeted display networks such as, Google Display Network for years. In fact, Google created a private programmatic exchange last year for ABC that places only masthead ads on premium sites that they are now rolling out to all advertisers.

Marin Software, a leading cross-channel performance advertising platform used by advertisers and agencies, also embraces programmatic media buying across search, social, and display. They measure, manage, and optimize upwards of $6 billion in programmatic ad spend. Marin’s recent acquisition of the Perfect Audience retargeting DSP has expanded its ability to buy display inventory across all the major display ad exchanges including Google Display Network, the Rubicon Project, OpenX, AppNexus, and PubMatic.

AOL is also reaping big benefits from its recent programmatic buying push. According to CEO Tim Armstrong, AOL’s advertising business increased by 20% last quarter – growth that can be attributed primarily to its programmatic ad buying platform.

The Bottom Line

Fortune 500 brand advertisers with big budgets (many are consumer packaged goods brands with a surplus of consumer data- perfect for proprietary algorithms) want to see the same efficiencies that they realize from digital incorporated into all of their media buys. They’re using programmatic buying through demand side platforms for print, broadcast, and digital to get the lowest cost-per-thousand impressions (CPM) and highest return-on-investment (ROI) using RTB.

Programmatic buying is here to stay. It will continue to grow and evolve as more brands invest in technology and as more media is delivered digitally. Market research company, eMarketer, estimates that programmatic spend in digital display advertising will rise to over $20 billion by 2016, which the company estimates would be 63% of all U.S. digital display ad spend.

It’s unlikely that 100% of media buys will be purchased this way in the foreseeable future. There are still a number of barriers to adoption. Top barriers include; brand worries that they will lose control over where their ads will appear, internal resistance at ad agencies and publishers and lack of transparency in the industry over methods and results.

To learn more about programmatic buying, start a conversation with one of our marketing specialists today.